New Jersey Board of Public Utilities Harshly Criticized

New report recommends the state agency responsible for regulating New Jersey’s utilities be reorganized to emphasize the federal role in setting energy and telecommunications policies.

The New Jersey Board of Public Utilities is too preoccupied with trying to manage its Office of Clean Energy, one of several shortcomings hobbling the agency’s effectiveness according to a transition report prepared for Gov. Chris Christie.

In a blunt and critical review, the report recommends the state agency responsible for regulating New Jersey’s utilities be reorganized to emphasize the federal role in setting energy and telecommunications policies. The report also advises the agency switch to new methods of rate regulation, including formula-based rates, which allow utilities to raise rates without undergoing agency review.

“The BPU is not focused on its core mission and is trying to do too many things, especially trying (and failing) to manage the Office of Clean Energy,’’ the report said.

The transition team also said the state should eliminate two of the five commissioners at the New Jersey Board of Public Utilities and shift its offices to Trenton, closing what it called the expensive office space in Newark’s Gateway Center.

Much of the report focused on the agency’s Clean Energy Program, which has come under criticism for sloppy record-keeping and financial mismanagement in the past even as it helped promote the use of solar energy systems throughout the state. New Jersey is now second only to California in the number of solar energy systems it has installed.

The program, financed primarily by a surcharge on customers’ utility bills, has grown rapidly in recent years and its budget for the coming fiscal year now exceeds $500 million. The report said it is not clear whether the Clean Energy program funds are being used most effectively, recommending the state’s Economic Development Authority take over administration of the program.

In a recommendation likely to draw fire from environmentalists, the report also suggested tapping into a portion of the $1 billion in funds the BPU expends on clean energy and other programs to help the state in its current budget crisis.

Beyond eliminating two commissioners, which the transition team suggested could save $1 million annually, the report also recommended reducing the staff of the agency by between 10 percent and 20 percent, a move that could reap $2 million to $4 million in savings.

The transition team also wants to take another look at the new Energy Master Plan, which was adopted by the Corzine administration last year. Among other things, the plan calls for an aggressive goal of having 30 percent of the state’s energy come from renewable sources, such as wind and solar power projects, by 2020. It also wants to reduce energy consumption by businesses and residents by 2020, a target some believe will be virtually impossible to achieve.

The report also implicitly supports efforts by Public Service Electric & Gas to build a controversial power line project that would cut through the heart of the Highlands in northern New Jersey. The line is backed by the utility and the independent operator of the regional power grid as a way to prevent reliability problems in the region beginning in the summer of 2012.